2015 sofa final

Presented by

ROBERTO V. GARCIA Chairman and Administrator, Subic Bay Metropolitan Authority

MARCH 17, 2015

The Philippine

Economy in 2014

THE GOOD NEWS

3

The Philippines is the Next Asian Miracle

and a global model in fighting corruption, as

it emerges from decades as a regional

economic laggard.

Jim Yong Kim World Bank President

July 15, 2014

PH GDP growth is second only to China in Asia

4 S U B I C B A Y M E T R O P O L I T A N A U T H O R I T Y

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

PH GDP Growth

2010 7.7%

2011 3.7%

2012 6.8%

2013 7.2%

2014 (FY) 6.1%

2014 (4Q) 6.9%

2000 - 2014 PH GDP Growth

Source:


Ease of Doing Business in PH improves

World Bank

Ease of Doing Business

Report 2014

World Economic Forum (2013/2014)

Global Competitiveness Index

Economic Freedom of the World

2013 Annual Report

2013 Index of Economic Freedom

+5 Out of 152 countries:

From #61 to 56

+30 Out of 189 countries: From #138 to 108


From #107 to 97


From #65 to 59

PHL Jumps to 59th in

Competitiveness Index

Source: RAPPLER.COM

Country Rank

Singapore 2

South Korea 23

Malaysia 24

China 29

Thailand 37

Indonesia 38

Philippines 59

Vietnam 70

Cambodia 80

Laos 81

PH becomes more competitive

S U B I C B A Y M E T R O P O L I T A N A U T H O R I T Y 6


Credit rating encourage investors in PH economy

Ba1

Baa3

Outlook:

Positive

BB+

BBB-

Outlook:

Stable

BBB-

2013 2014

BBB

Outlook:

Stable

Source: Survey Conducted by the US Chambers of Commerce in ASEAN, Manila Bulletin, September 4, 2012

PH: Asias most popular expansion destination


Philippines hits highest FDI

2014

US$ 6.2 B (63% higher than 2013)

2013 US$ 3.8 B

2012 US$ 3.2 B

2011 US$ 2.0 B

2010 US$ 1.1 B


Source:

SBMA TODAY

Key Performance Indicators

Revenues Per Strategic Business Unit

Big revenue gains across all Freeport business sectors


FPI 2013 2014 Variance

Maritime &

Logistics

626.55 908.60

Industrial &

Commercial

Leases

996.86 1,115

Tourism 12.15 19.61

Total Operating

Revenues

2,013 2,442 21%

45%

61%

12%

I. Maritime / Logistics Strategic Business Unit

2014 vs. 2013


Classification 2013 2014 Variance

Actual Revenues PHP626 M PHP908 M

Containerized Cargo

(in TEUs) 37,469 77,177

Non-containerized

Cargo (in MTs) 2,404,649 6,112,644

No. of Ship Calls 2,177 2,591

Gross Registered

Tonnage 33,591,875 40,147,025

45%

105%

154%

19%

20%

Port Expansion

Active participation in the Cabinet Cluster on Port Congestion and

implementation of E.O. 172, designating Subic as alternate to Port of

Manila

To attract more shipping lines, harbor fee and berthing fees were reduced

by 83% and 88%, respectively for a period of six (6) months

Hosting of Traffic Summit with operators and drivers of cargo-hauling

companies to discuss measures on ensuring efficient traffic flow of

container trucks in the Freeport and avoiding congestion

Aggressive marketing to increase port volume through speeches with the:

Association of International Shipping Lines

Chamber of Accredited Customs Brokers

Clark and AFAB locators

Philippine Ship Agents Association

8th Philippine Ports Authority Conference on Shipping and Ports


SUBIC PORT IS NOW CONNECTED TO THE WORLD!


NYK SITC MAERSK APL WAN HAI

Kaohsiung Manila Tanjung Subic Bay Kaohsiung

Subic Bay Subic Bay Manila Manila South Manila North

Manila Jakarta Subic Bay Singapore Manila South

Ho Chi Minh Xiamen Singapore Surabaya Subic Bay

Singapore Busan Jakarta Kaohsiung Hong Kong

Osaka Manila North Surabaya Cebu Keelung

Shimizu Manila South Busan Laem Chabang Taichung

Nagoya Shanghai Vostochiniy Batangas Port Kelang

Yokohama Ningbo Nansha Busan Taipei

Yokkaichi Hakata Tagoloan Tokyo

Kobe Hong Kong Yokohama

Tokyo Chiwan Nagoya

Laem Chabang Malalag, Davao Chiba

Shanghai Yokkaichi

Shekou

Cebu

II. Industrial & Commercial Leases Strategic Business Unit

Investment Promotion

KPI 2013 2014

2014

vs 2013

Total Approved

Committed

Investments

(NEW PROJECTS)

PHP 3.6 B PHP 18.5 B

Cumulative

Investments

(1992-2014)

US$ 8.7 B

US$ 9.1 B

5%

414%


Territorial expansion under E.O. 675 in cooperation

with Local Government Units

10,000 hectares in San Antonio,

Zambales, ideal for tourism and

resort development

50 hectares of coastal land in Subic,

Zambales, ideal for shipbuilding and

ship repair

400 hectares of land in Castillejos,

Zambales, viable for industrial

development for light manufacturing

industries and warehousing

900 hectares of Olongapo City

viable for commercial / residential,

mixed use, and eco-tourism

development


THIS SITE

THIS SITE

THIS SITE

2014 Industrial and Commercial Development

PHP 11.4 B committed investment

356 jobs for manufacturing sector

388 jobs for commercial sector

HANJIN additional jobs in 2014: 7,537

Total no. of workers: 25, 704

Investment Promotion Initiatives

Supreme Court ruling upholding RP Energys coal power in Barangay Cawag,

Subic, Zambales paving the way for the construction of the plant which will

provide adequate and lower priced power to the Freeport.

Pastolan Ayta communitys approval of a US$200-million renewable energy

project in an 800-hectare area within the Aytas ancestral domain in SBFZ

An increase in Hanjins production, from 9 vessels in 2013 to 22 vessels in 2014,

with a corresponding increase of 48% in export value, from US$440 million in

2013 to US$853 million last year

Increase in Vales transhipment operations by 19%.


III. Tourism Strategic Business Unit

TOURISM TRAFFIC (ARRIVALS VIA SCTEX ONLY)


YEAR VISITOR

ARRIVALS

2013 5,697,554

2014 6,398,376

TOTAL 12%

Meetings, Incentives, Conventions, and Exhibitions

2014 vs. 2013


MICE & Special Events No. of Participants

Classification 2013 2014 Variance 2013 2014 Variance

International 4 10 150% 13,485 26,050 93%

Local 190 268 41% 113,459 219,795 94%

TOTAL 194 278 126,944 245,845 94%

43%

Sports Events and Participants Count

2014 vs. 2013


Sports Events No. of Participants

Classification 2013 2014 Variance 2013 2014 Variance

International 18 17 (6%) 12,485 21,870 75%

Local 37 59 59% 30,730 21,830 (29%)

TOTAL 55 76 43,215 43,700 38% 1%

Completed Leisure Projects in 2014

Freeport Elite Resort, Inc.

Completed 80-room condotel facility in

December 2014

Actual Investment: PHP208 million

Mansion Garden Hotel

New 450-pax function room opened in

December 2014

2nd hotel facility to open in April 2015

Subic Grand Harbour Hotel

New 70-room hotel opened in December 2014

Actual Investment: PHP95 million


Completed &/or expanded Leisure Projects in 2014

Sun Plaza Subic

37 condotel units opened in August 2014

Actual Investment: US$3 million

Wow World

Olympic-sized swimming pool opened in May 2014

Actual Investment, including new commercial

building: PHP46 million

Interpark Hotel

54-room expansion completed in 2014

Construction of commercial spaces to be complete

in 2015

Moonbay Marina Villas

15 new villas completed in 2014


Tourism Strategic Initiatives

1. 2014 DOT Region III Report

SUBIC IS THE NO.1 tourist destination in Central Luzon with 1.2 million

tourists followed by Clark with 621,000.

Subic enjoyed the highest hotel occupancy rate in Central Luzon at 69% vs.

the average of 62%.

2. Signing of a 3-year MOA with the prestigious Century Tuna IRONMAN 70.3,

together with the widely acclaimed Summit 5150, TRAP, and Tri-United, making

Subic the undisputed Triathlon Capital of the Philippines.

3. Subic is now also known as the Theme Park Capital of the Philippines and the

Sailing Capital of the Philippines.

4. Holding of the Advertising Summit, the most prestigious MICE event.


Good Governance Initiatives

Improved Peace & Order


2007 2014 COMPARATIVE CRIME VOLUME

295

195

116

128

106

47 38

31

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013 2014

Improved Security

Delivery and deployment of 8 brand new service vehicles to the Law

Enforcement Department (LED) to augment security efforts in the Freeport

Recognition by the PNPs Anti-Illegal Drug Special Operation Task Force of

LEDs valuable and outstanding support to the seizure of PHP2.5 billion worth

of shabu in Subic, Zambales.

Substantial decrease of 75% in crime volume from 2010 to 2014

Implementation of new traffic rules and higher penalties to improve traffic

discipline


National Government and LGU Shares


Allocation

from 5%

Corp. Tax 2011 2012 2013 2014

2014

vs

2013

National

(3%)

PHP199 M PHP187 M PHP211 M PHP298 M

LGUs

(2%)

145 M 139 M 156 M 199 M

TOTAL 344 M 326 M 367 M 497 M

41%

28%

36%

GOOD GOVERNANCE

Jobs, Exports, and Govt. Collections

2014 vs. 2013


KPI 2013 2014 Variance

Employment 89,584 96,958

Export

(FOB-US$)

US$ 1.4 B

US$ 2.3 B

BIR Cash

Collection PHP 1.4B PHP 1.8B

BOC Cash

Collection PHP 11.3B PHP 15.3B 36%

27%

58%

9%

Good Governance Initiatives


Managements efforts to upgrade employees salaries resulted in the Presidents

approval of the 10% increase retroactive to January 2013 with back wages of PHP48

million. The last salary increase of employees was 6 years ago.

Management has further budgeted in 2015 a total of PHP400 million in salary

increase under the Standard Salary Law retroactive to 2009.

SBMA gave PHP243 million in dividends to the National Govt.. SBMA ranked No. 9

among the 39 GOCCs after not having remitted dividends since 2004.

Institutionalization of Integrity Program in SBMA and signing of Integrity Pledge by

Freeport locators as a shared commitment to adhere to ethical business practices

Signing of IRR with the Pastolan Aetas and NCIP, thus paving the way for the full

implementation of the Joint Management Agreement

Holding of First Womens Summit in SBFZ to promote the welfare and development

of womenfolk

Renewal of ISO 9001 certification due to no major audit deficiencies

Environmental Protection

Strict implementation of Permit to Transport Effluent and Sewage

Donation from the proceeds of the Chairmans golf tournament of 2 military jeeps

now used for forest patrols to eradicate illegal logging and kaingin practices

Launch of Ecology Dept.s Guard My Nest sea turtle conservation program for

stakeholders to make their establishments more pawikan-friendly

Increase in the following environmental protection efforts:

17% in the number of trees planted in the Freeport;

250% in the number of biodiversity inspections/monitoring activities of the Multi-

Tripartite Monitoring Team; and

120% in the Ecology Dept.s Terrestial Conservation Monitoring activities

Holding of First Water Summit

Participation of SBMA in the International Coastal Clean-up activity


Other Accomplishments

Hosting of the International Network of affiliated Ports (INAP)s 16th General

Assembly and Symposium, focusing on mutual opportunities and cooperation in

light of the ASEAN Integration

Elevation of the SBMA Rescue Team to the Hall of Fame of Gawad Kalasag

Best Government Emergency Response Team

Increase of 22% in the Freeports active manpower employed in the shipbuilding

and other marine-related services sector, 16% in the domestic

helpers/caretakers sector, and 14% in the services sector

Improved environment and beautification of the Freeport through continuous

implementation of Operation Facelift.


Financial Performance

2014: A Third Record Year

21%

SBMA GROSS REVENUES

2014 is HIGHEST ever.


200

420

610

800

1,180

1,410

1,310

1,400

1,560 1,540

1,340

1,600

1,500 1,570

1,470

1,570

1,670

1,420 1,400

1,630

2,020

2,442

(400.00)

100.00

600.00

1,100.00

1,600.00

2,100.00

2,600.00

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Millio

ns

SBMA GROSS REVENUES

2011-2014


1,398.77 (100%)

1,443.35 (89%)

1,475.06 (73%)

1,594.94 (65%)

0.00 (0%)

184.02 (11%)

544.90 (27%)

846.67 (35%)

0

500

1,000

1,500

2,000

2,500

3,000

2011 2012 2013 2014

Millio

ns

Existing Revenues New Revenue/Cost Recovery Initiatives

1,627.38

2,019.96

2,441.61

1,398.77

SBMA OPERATING INCOME (EBITDA)



EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

39

183

338 361

589

750

550

653

869

779 795

341

435 475

240

359 406

367 329

627

920

1391

0

250

500

750

1000

1250

1500

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Millio

ns

51%

SBMA NET INCOME



40%

-185 -73 -35 -82

2 8

-106

245

33 135 170

-928

-102 -233 -138

-2,540

-417

-1,203 -1,119

800

1,110

1,556

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Millio

ns

BENCHMARKING

PHILIPPINE ECOZONES & FREEPORTS


SBMA is the largest and most progressive Freeport

Particulars SBMA PEZA CDC CEZA AFAB PPMC

TOTAL ASSETS 28,089,039,000 5,971,132,000 5,722,137,240 5,475,883,000 1,502,943,911 97,193,218

TOTAL

LIABILITIES 11,114,149,000 1,718,146,000 2,228,207,702 287,658,000 524,169,802 36,422,074

TOTAL EQUITY 16,974,890,000 4,252,986,000 3,493,929,538 5,188,225,000 978,774,109 60,771,144

REVENUES 2,954,140,000 7,979,394,000 1,303,999,000 492,963,000 823,966,671 66,259,000

EXPENSES 1,788,292,000 6,501,079,000 947,032,677 209,862,000 816,436,539 69,215,000

NET INCOME

(LOSS) 1,110,450,000 1,036,920,000 331,736,917 200,338,000 7,530,133 (4,278,035)

Source: COMMISSION ON AUDIT

2014 Approved Investments

(In PHP Million)


3,392.5

1,153.4

3,582.8

13,040.9

619.0

18,440.1

2013

2014

SBMA Prospects

2015 and Beyond

Projected Economic Growth

PHL is expected to register the 3rd highest GDP growth rate in the world!


Projected Change in REAL GDP in 2015

Country GDP

China 7.1%

India 6.4%

PHILIPPINES 6.2%

USA 3.1%

UK 2.7%

Canada 2.4%

Japan 0.8%

Source: WORLD ECONOMIC OUTLOOK, Oct. 2014

What We Face in 2015

THREATS

Looming power shortage in Luzon and Visayas this summer due to inadequate

power capacity and high power demand during summer

Effect of Fiscal Incentives Rationalization bill on non-PEZA enterprises located

inside economic zones and free ports

National Governments study to build a mega port outside Metro Manila in

anticipation of container volume build-up in 5-8 years

Political activities in anticipation of 2016 National and Local Elections

PHLs 101st ranking out of 144 countries in terms of port infrastructure, which is

the lowest among the ASEAN-6 (Source: 2014 WEF Global Competitiveness Index )


What We Face in 2015

OPPORTUNITIES

SBFZs role in ASEAN Integration as an extension of the Port of Manila, transshipment

hub, logistics center, manufacturing base, and cruise destination

Congestion in the Ports of Manila, Batangas, and Cebu

Major PPP projects by the National Government in the offing, like the Tarlac-Pangasinan-

La Union Toll Expressway and the NLEX-SLEX Link Connector, both of which will improve

the Freeports accessibility

Integrated and simplified NLEX-SCTEX toll payment system to be completed before end-

2015

Inclusion of Subic with the ports of Davao, Bohol, Boracay, Cebu, Metro Manila, Puerto

Princesa, and Zamboanga in PPA-DOTs list of eight (8) ports billed as the countrys top

international hubs for cruise liners


2015 Strategic Initiatives

Strategic Directions

Move from over-regulation to developmental mode

Expand Freeport area to accommodate more investors

Capitalize on Philippines economic boom by aggressive marketing of

the Freeport to attract more investments

Focus on game-changing projects

Institutionalize good governance initiatives


I. Maritime/Logistics Strategic Initiatives

1. Aggressively promote the Freeport Container Terminal to increase

capacity utilization, targeting at least 120,000 TEUs or 20% utilization

2. Expand Tipo Road to ease expected traffic congestion

3. Initiate feasibility study on expansion of container port to 1.2 million

TEUs, as well as new bypass road to connect directly to SCTEX

4. Hold 2nd Maritime Summit in April 24 to convince more Central Luzon

shippers to use Subic Bay

5. Support Hanjin, as well as the other boat builders, to further expand

their operations and employment

6. Support VALE, as well as other logistics hub enterprises, to expand

operations


II. Industrial and Commercial Leases Strategic Initiatives

1. Initiate the development of additional industrial parks, totaling at least

500 hectares, to accommodate new investors in cooperation with

LGUs with suitable areas

2. Attract big BPOs to locate in the Freeport, targeting at least 15,000 call

center agents in the next 3 years

3. Promote the Freeport among residential developers for additional

housing

4. Bring in high value added and high technology industrial firms


III. Tourism Strategic Initiatives

1. Aggressively market the Freeport to increase MICE and sports events

2. Launch a branding and promotional campaign to project tourism

potential of the Freeport

3. Participate in important trade fairs to generate interest in the Freeports

tourism programs

4. Renovate SBECC and other tourist facilities

5. Continue promoting the Freeport as the Theme Park, Triathlon,

Sailing, and Sports Capital of the Philippines.


Ongoing Leisure Projects for completion in 2015

Edgewater Intl. Trade & Development Corp. 32-room hotel

Committed Investment: PHP20 million

Subic Bay Peninsular Hotel Total of 90 hotel and function rooms

Vascos Hotel and Restaurant Expansion from 14 to 22 hotel rooms

Grand Pillar International Four-storey building with swimming pool and elevator

Est. Total Project Cost: PHP240 million

Sands of Triboa Resort Phase 1: 110 world-class hotels and resort rooms

Total Projected Investment, including residential development

project for completion in 2019: PHP659 million


Good Governance Strategic Initiatives

1. Make business environment more friendly and convenient for locators

with new CRTE process

2. Further improve employees salaries by securing DBM/OP approval of

SSL in 2015

3. Formulate new organizational set-up for better focus and efficiency of

operations

4. Continue crusade against corruption by getting all stakeholders to sign

Integrity Pledge

5. Continue to improve peace and order in the Freeport by further

reducing crime rates and protecting our forests and waters.

6. Invest PHP800 million CAPEX to upgrade long neglected equipment

and infrastructure


2015 CAPEX PROGRAMS


1 ROAD AND BRIDGES PROJECT 53.0

NSD Road Network 37.5

Detailed Engineering of Magsaysay Bridge 4.4

Rehabilitation of Aparri Road 9.8

44 sets of unified directional signages 1.3

2 PORTS IMPROVEMENT 11.8

Enhancement of Off-shore Approach Light Barette Steel Piles 2.5

Refurbishment of airfield signage and markers 3.0

Rehabilitation of rubble mound for barette light runway 07 4.0

Strengthening of Existing Seawall at GTI Area 1.0

Connection of Permanent Power Supply @ NSD New Warehouse 1.3

3 ENHANCEMENT OF SBMA OPERATIONS 111.7

Biometrics Timekeeping 1.9

ERPS 50.0

Desktop Computers and other related IT Equipment 58.0

Construction of Storage Area 1.5

Construction of Toll Booth at Tipo 0.3

4 PURCHASE OF SERVICE VEHICLES 49.6

30 units of CUV/Pick up/Passenger Van/AUV 37.6

2 units of bus/mini-bus 12.0

2015 CAPEX PROGRAMS


5 SECURITY AND SAFETY PROJECTS 70.4

5 units of patrol boat/rubber boat/dive boat 8.6

CCTV 60.0

Rifles and ammunitions 0.9

2 units highway patrol 0.9

6 IMPROVEMENT OF SBMA SERVICES 51.1

11 units Heavy Equipment (dump truck, dropside, compactor) 51.1

7 DISASTER READINESS (RISK REDUCTION) 62.0

I unit of Structural Fire Truck 32.0

3 unit of military/stake truck 24.0

I unit of ambulance 6.0

8 CORPORATE SOCIAL RESPONSIBILITY 12.0

Construction of two (2) Classroom HS Building and Clinic at Pastolan 12.0

9 COMPLIANCE WITH NATIONAL DEVELOPMENT PROGRAM 2.0

Gender and Development/Day Care 2.0

10 OTHERS 400.8

SBMA Corporate Center 400.8

TOTAL 836.3

INDUSTRY SECTOR

SOURCE

NO. OF

JOBS NATURE OF JOBS

TOURISM & SERVICES 10,000 HRM, Hotel Staff, Chefs, Nutritionists,

Back Office

SHIPBUILDING 10,000 Welders, Painters, Design Engineers,

Naval Architects, Scaffolders

BPO 20,000

Call Center Agents, IT Technicians,

Design Engineers, Web Design

Specialists, Medical Transcriptionists

MANUFACTURING 5,000 Factory Workers, Technicians,

Production and Quality Supervisors

MARITIME & LOGISTICS 5,000 Warehousemen, Shipping Specialists,

and Customs Brokers

TOTAL: 50,000 JOB PROSPECTS


Focus on inclusive growth over the next 5 years

SBMA contribution to the National Economy

2014 vs. 2013


KPI 2013 2014 Variance

BOC Php11.2B Php15.3B 36%

BIR Php1.4B Php1.8B

Govt. 3%

GIE share Php211M Php298M

LGU 2%

GIE share Php156M Php199M

Dividends 0 Php243M

TOTAL Php12.96B Php17.84B

28%

41%

27%

36%

38%

THE GOOD NEWS

54

The good news never gets old because it just

keeps getting better for the Philippines.

(President Aquino in his roundtable discussion with CEOs and senior

officials from the US Chamber of Commerce and the US-ASEAN

Business Council in New York on September 23, 2014)

2015 sofa final

Documents

u t h o r i t y source

u t h o r i t y ease

u t h o r i t y classification

u t h o r i t y fpi

e t r o p o

u t h o r i t y credit

competitive s u b i

ph gdp growth source